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Wednesday, September 5, 2012

Market is rife with the news about rising gold prices every day.
In one of my previous posts I had discussed reasons responsible forrising gold. There
is no foolproof methodology for determining whether this yellow metal
is overbought or not as it is determined by demand & supply scenario.

The ratio of gold price to crude price has been found to settle
around 15.

By this time spot gold is trading at 1691 $ per ounce while Nynex
crude is hovering around 95 $ per barrel.

This gives gold to crude ratio as 17.8.

Gold prices are also juxtaposed against silver prices.
Gold to silver price ratio have been found to hover in the 50-60
range.

Presently silver is trading at 32 $ per ounce and this give
the aforesaid ratio as 52.84.

Gold is rising in the hope of stimulus package from the US Federal
Reserve under which US fed pumps money in the economy (by buying bonds)
to stimulate the fledgling US economy mired under
the huge debt better termed as Quantitative Easing (QE).

This excess money flows into commodities especially gold as it
used as a hedge against the inflation resulting in higher gold prices.

But following a severe reprimand from Republicans it will not be
easy for the US fed to go with its stimulus programme.